Wyomissing, Pennsylvania, headquartered casino and racetrack operator Penn National Gaming is lauding strong M&A and expansion efforts, as it reports increases across the board in its latest set of financial figures.
Reporting on the three months and full year ending December 31, 2018, net revenues came in at $1.1bn (2017: $769m) and $3.5bn (2017: $3.1bn) respectively, primarily driven by the company’s acquisition of Pinnacle Entertainment last year.
Operating income for the quarter stands at $124.3m (2017: $26.7m), with a net loss of $42.0 million, driven largely by one-time transaction costs associated with the Pinnacle purchase, with its FY figure standing at $634m (2017: $445.7m).
Penn National’s adjusted EBITDAR finished at $323.9m for Q4, driven by a $113.0m contribution from the Pinnacle acquisition and growth of $11.8 million, or 5.9 per cent, in the company’s same-store portfolio of properties, for the whole of 2018 this is boosted to a fraction over the $1bn barrier (2017: $879.1m)
Timothy Wilmott, CEO of Penn National, expressed delight at the company performance “I am pleased to report that Penn National beat guidance for the fourth quarter, with improvements across the board in our principal financial metrics. These results were driven by contributions from the Pinnacle acquisition and continued growth in our same-store portfolio of properties.
“The fourth quarter marked the end of a transformational year for Penn National. With the closing of our acquisition of Pinnacle in October, we added over 10,000 new team members and 12 gaming properties to what was already the industry’s leading regional gaming portfolio.
“In addition, we obtained the approvals for our acquisition of Margaritaville in Bossier City, Louisiana in the fourth quarter, and we announced our acquisition of Greektown Casino-Hotel in Detroit, Michigan, which will expand our operating base to 42 facilities in 19 jurisdictions following receipt of all remaining customary approvals. Both transactions are expected to be immediately accretive to operating results upon closing.
Before providing an update on Penn’s ongoing integration efforts concerning Pinnacle: “As anticipated, we remain well on pace to achieve our two-year, $100m run rate cost synergy target, with a run rate of $50m anticipated in 2019 and an additional $50 million expected by the end of 2020.
“We have begun to focus on revenue synergies and plan for initiatives to commence in late-2019. We currently anticipate incremental Adjusted EBITDAR associated with revenue synergies related to Pinnacle to be in the range of $15-$20m.
“The majority of those synergies should be realised in 2020 and early 2021. As noted in the tables below, Penn National incurred significant one-time transaction costs and charges in the 2018 fourth quarter. We anticipate our transition-related expenses to stabilise as we complete our integration efforts later this year.”
